Why The Bankruptcy Rate in Canada Spikes After Christmas, and What You Can Do To Avoid Bankruptcy After Christmas

I have worked as a personal bankruptcy trustee in Canada for many years, so I know from experience that one of our busiest phone days of the year is the first Monday back after the Christmas holidays. I assume that January 4, 2010 will be no different: the phones will be ringing off the hook.

I have worked as a personal bankruptcy trustee in Canada for many years, so I know from experience that one of our busiest phone days of the year is the first Monday back after the Christmas holidays. I assume that January 4, 2010 will be no different: the phones will be ringing off the hook.

Why? Because we all tend to spend too much at Christmas on our credit cards, and as the bills start to arrive in January we realize that we have a serious problem. But it’s not just the bills that cause us to worry.

Christmas is, for many people, a very stressful time of year. Canada is currently suffering through our worst recession in decades. Many Canadians have lost their jobs, and simply don’t have the money they’ve had in the past to buy Christmas presents. That’s stressful; we worry that we are letting our family down.

Many others went through a life changing event this year, like a marriage separation or divorce. You may be alone this Christmas for the first time ever; that’s very stressful. Being alone also gives you a lot of time to think, and a lot of time to worry about your bills.

So what can you do to avoid problems in January?

First, make a plan. When you had money in the past you could spend a lot on Christmas presents. This year that may not be possible. So be realistic. If you only have $50 to spend, that’s all you have, so that’s all you can spend. Talk to your family and friends and explain that while you would love to buy expensive presents for everyone this year, you simply can’t.

Guess what: they will understand. You are not alone. Everyone else is in the same predicament. Very few people saw their incomes increase this year; most Canadians are suffering from reduced income and higher expenses, so they will understand your situation. Don’t hide from your family and friends. Don’t be embarrassed. Face everyone head on, and tell them what’s happening.

Second, enjoy Christmas. You can still give gifts without racking up your credit cards. If you are a creative person, make gifts for people. If you have skills, use them. Tell your mother that this year your present will be shoveling her driveway all winter. Tell your father you are taking over his lawn cutting duties this summer. Tell your sister that you will watch her children a few times this winter so she can go out to dinner with her husband. And tell your friend that your present to them this year will be four hours of your time to help them figure out why it takes ten minutes for their computer to boot up every morning!

Can’t afford to host your big Christmas party this year? No problem. Talk to your close friends and family and arrange a simple “bring your own” party. Everyone contributes part of the meal, so the cost isn’t huge for anyone.

You can avoid the post-holiday credit crunch, but only if you take action now, make a plan, and be up front with your friends and family. They will appreciate your honesty, and you will have a much less stressful Christmas.